The world appears to be a less safe place than yesterday or the day before and I was reminded by a radio interviewee overnight of what Roman general Vegetius Renatus wrote in Epitoma Rei Militaris “If you want peace, prepare for war”.
Those words had, I believe, been written as a consequence of his own belief that the quality of the Roman Army had deteriorated and moreover, that it had decayed and grown weak because it had become idle through the long years of peace. The ultimate fall of the Roman Empire was not to be that far away.
So where is the fit? Well, news overnight of the appointment by President Trump of John Bolton as the new National Security Advisor has been received rather like a man being stung by a bee in the back of the neck!
A decades long Republican defence Hawk who has served under Ronald Reagan and both George and George HW Bush, Bolton is on record calling for the US to scrap the Iran agreement and worse, to invade North Korea. What you see is what you get, a bastion of cold war politics returned. And remember, although he may say that all that was in the past, ‘Leopards do not change their spots’.
Apart from worsening already patchy relations with Iran and probably with North Korea as well, Bolton believes that Russia should be dealt with very severely in respect of both the Salisbury UK attack and Russian interference during the last US presidential election. He is also one of the seemingly diminishing number of people who believe that the US invasion of Iraq was no mistake. Last but not least, he is no fan of the United Nation of the Security Council on which he previously served as a very controversial US ambassador. I am unclear what his views on NATO are!
Meanwhile, as Theresa May can leave Brussels later this morning in the knowledge that not only have EU leaders approved guidelines for the negotiation of future relations with the UK and that will hopefully lead to a broader political agreement being achieved by October but also had EU backing for the course she has taken in respect of it being highly likely that Russia was behind the Novichok nerve agent attack in Salisbury. The words of the European Council which is the representative body of all EU leaders made it very clear that “there is no other plausible alternative explanation”. We should of course not be that surprised that the EU statement should have read that “We stand in unqualified solidarity with the United Kingdom in the face of this grave challenge to our shared security.” As a result, Brussels has already recalled its ambassador to Moscow, a rare if almost unprecedented diplomatic course of action and that will without doubt not have gone unnoticed in the Kremlin.
As if all the above was not bad enough the world is in shock as a result of the proposal by Donald Trump to place tariffs of $60 billion on Chinese goods. We know and understand the reasoning and after all, this is exactly what Mr. President promised he would do through the election campaign. Deep down although we dare not say or admit it, we probably believe that Trump is right to take action. Fears that a global trade war cannot now be prevented unless Trump backs off are real enough and make no mistake, China holds plenty of cards that can damage America not least of which is that China is the primary funder of American debt and deficit.
Markets dislike fear of the unknown and of anything over which they have little or no control. Hence the dramatic falls in stock market values across the world. My chum Anthony Peters reminded in his very interesting piece today that:
“On Tuesday, January 30th 2018 [when] President Trump stood up in front of the joint houses of Congress to give his address on the state of the union he proudly pronounced [that] the stock market has smashed one record after another, gaining $8 trillion in value. That is great news for Americans’ 401k, retirement, pension, and college savings accounts.” On that day the Dow had closed at 26,076.89. On the Friday before, so just three trading sessions earlier, it had hit what was to prove to be its all-time high of 26,616.71 pts. Last night the index closed at 23,957.89 pts with a loss of 724.42 pts or 2.93% on the day and down 8.13% since the night of Trump’s hubristic claims. That said, even after recent volatility the market is still up over 27% from the date of his election and 21% since the inauguration”.
So plenty of room for more selling yet. Of course, diplomacy will eventually take the hand of common sense and there will be some kind of fudge on this. But this time, it will unlikely involve the World Trade Organisation who, even if they could muster the parties together to create agreement have, by their continual inability to enforce agreed rules and subsequent rulings let alone police them, lost credibility.
So where to sum up? Well it has certainly not been a good couple of weeks in respect of geo-politics and the fear that America will be hurt more than its detractors and would-be enemies will be is real enough. On top of all this a global trade war at this juncture could be downright dangerous. Closer to home I have nothing but praise to offer Prime Minister Theresa May for her handling of the Salisbury poisonings and indeed, although I have long had reservations about Brexit, we do now appear to be moving in the right direction in respect of future relations with the EU and through the transition/implementation period. Sure, issues such as Northern Ireland, Gibraltar and those in respect of future trade and security are yet to be resolved and no doubt many more but we should at least give the UK team and indeed, those in the EU credit for what has already been achieved in this unprecedented task. Mind you, even I have to say that the thought of having our new Passports printed in France is little short of an own goal. The Government now has seven days to reverse the decision before it has to be formally announced.
And the summing up then – well I’ll leave that to another chum who lives in the US and who wrote to me overnight using these words:
”You will have observed from over the pond the hotting-up of events. While Tillerson was evidently a lousy Secretary of State, his departure, the manner and what it indicates about President Trump is disturbing. McMaster is now gone and a very dangerous man, John Bolton is to replace him. Trump’s troubles with women, Russia and Mueller have embattled him in the extreme. Far from cowering him, they seem to have emboldened him – witness the readiness to take the world into a trade war. We face some dangerous times to come, possibly. Who can afford to ignore this? The elevation of Bolton should make any person with the slightest intellectual nous, quiver. In the meantime, stupid Britain plays its part to add to the de-stabilization of a singularly important and stable alliance as we all face a resurgent Russia and a frightening China – having a foot in each country with honorable service, I damn the foolish men and women who fail to recognize the real wolves at the door. We inch towards a foreign military adventure to de-stabilize global balance and have madmen in command and weak men and women and fools who refuse or who are incapable of imagining consequences. Very worrying”.
Does that say it all?
Have a nice weekend. Commentaries on Cyprus and GKN follow over the next few days and over the next couple of weeks hopefully before I take my usual week long annual vacation to Portugal on April 7th, commentaries on recent company visits I have made to Edinburgh, Cheshire and Cambridge – that is of course, provided other events do not get in the way!
CHW (London – 23rd March 2018)
Howard Wheeldon FRAeS
Wheeldon Strategic Advisory Ltd,
M: +44 7710 779785